Speaker 1: Episode how to Save your first hundred thousand dollars. Welcome
Speaker 1: to the Frugal Friends podcast, where you'll learn to save money,
Speaker 1: embrace simplicity, rights, and liver with your life. Here your
Speaker 1: host Jen and Jill. Woo woo, whoo, whoo, whoa whoa, whoa,
Speaker 1: whoa whoa. Welcome to the Frugal Friends podcast. My name
Speaker 1: is Jen, my name is Jail, and today we are
Speaker 1: talking about the most difficult amount of money that you
Speaker 1: will save, your first hundred K. How do you feel
Speaker 1: about saving a hundred thousand dollars Jill, Well, if you
Speaker 1: can't tell by my little intro song, I feel excited, challenged,
Speaker 1: like I got an actual goal in mind. I think
Speaker 1: it's great, especially for those who might be finished with
Speaker 1: debt payoff. If you're not, that's totally fine. That is
Speaker 1: still a fantastic goal. But I think once we get
Speaker 1: to debt payoff, we can wonder, well, now, what do
Speaker 1: I do with all of these frugal skills that I've
Speaker 1: built and an ability to reach a goal. And this
Speaker 1: feels it feels in some ways lofty but yet also attainable,
Speaker 1: especially after having perused these articles. So I'm excited to
Speaker 1: get into it and inspire myself and inspired the first. Yes,
Speaker 1: but first our sponsors. This episode is brought to you
Speaker 1: by the Spending Symposium June through Who. So, if you
Speaker 1: guys were with us last year, you remember we had
Speaker 1: a Frugal Living Summit last July. It's in June this year.
Speaker 1: But it is four days of interviews. We have over
Speaker 1: twenty speakers with us, and we are honing in on spending.
Speaker 1: That's literally all we are talking about for four days.
Speaker 1: Why do we spend? How do we spend better? How
Speaker 1: do we optimize our spending. It's all around that aspect
Speaker 1: to try and help you either conquer over spending, feel
Speaker 1: better about spending in your budget, whatever issues you have
Speaker 1: with spending. And so it's four days just talking about that.
Speaker 1: So registration opens in two weeks and this is a
Speaker 1: free event, so be sure if you're not already on
Speaker 1: our email list, head to Frugal Living Summit dot com
Speaker 1: to get on the wait list to be the first
Speaker 1: to know when registration opens. But we are so excited.
Speaker 1: June is going to be an awesome, awesome month that
Speaker 1: caps off with this great event, and it's so fun.
Speaker 1: It's all virtual, so no worries, if you're traveling or
Speaker 1: you need to be home, you can jump on Engage
Speaker 1: as you're able. And we've got live Happy hours that
Speaker 1: have and each night, so if you want to join
Speaker 1: us live, that can happen too, but all from the
Speaker 1: comfort of your computer or your phone for free. Yes,
Speaker 1: So if you are as excited about saving a hundred
Speaker 1: thousand dollars as I am, that was a huge milestone
Speaker 1: for us to do, and I know that it is
Speaker 1: the hardest for most people. So if you want to
Speaker 1: queue up a few other inspirational and informational episodes to
Speaker 1: play after this one, we love episode one sixty five
Speaker 1: where to Save your Money, because we're gonna what we're
Speaker 1: going to be talking about today is a little bit
Speaker 1: different from what we talked about that both are kind
Speaker 1: of essential. And then episode two oh four how to
Speaker 1: transition from spender to saver, because that's a skill you're
Speaker 1: going to need if you want to save a hundred
Speaker 1: thousand dollars. But now now let's let's get into our
Speaker 1: articles for the week. This first one is from four
Speaker 1: Pillar Freedom and it's called the Math that explains why
Speaker 1: net Worth goes crazy after the first hundred k. So
Speaker 1: we wanted to put it first out why it's so hard,
Speaker 1: why it's so important, and some of the math that
Speaker 1: goes behind it. What do you think of this one, Jill? So,
Speaker 1: I have a confession to make to you, Jen, and
Speaker 1: I'm going to do it publicly on this podcast that
Speaker 1: this article opened my eyes too. We were talking a
Speaker 1: while back about our membership that we have that we
Speaker 1: get to enjoy just more relationship, more community over in
Speaker 1: that membership, and you were expressing a goal at one
Speaker 1: point that you want to help women get to their
Speaker 1: first one hundred thousand dollars in savings, and I was
Speaker 1: so on board. I'm like, how beautiful, Jen, this is amazing.
Speaker 1: You know that's that sounds so cool helping women get
Speaker 1: to a hundred k and savings or net worth awesome,
Speaker 1: let's do it. But to it kind of felt like
Speaker 1: just a cool arbitrary number, like sure, we found we
Speaker 1: were aiming at six figures. That sounds like something people
Speaker 1: might want to do. Let's go for it. I support you,
Speaker 1: and I don't think it wasn't until I read this
Speaker 1: article that there's actual math and reasoning behind that six
Speaker 1: figure number. And I really like how this particular article
Speaker 1: explains that in the beginning that they noticed this trend
Speaker 1: of people who saved their first one hundred thousand dollars.
Speaker 1: Now they're talking about savings and investments, but how they
Speaker 1: didn't really see exponential growth in that or a huge
Speaker 1: dent in their savings until they got to that six
Speaker 1: figure mark. So saving up until that point is still
Speaker 1: valuable and worthwhile, but we're not really going to see
Speaker 1: the benefit of compound interest until that one hundred thousand mark,
Speaker 1: until we see the scales start to turn. So it's
Speaker 1: not just an arbitrary number. There's a reason to aim
Speaker 1: at that number in order to see a noticeable impact
Speaker 1: in the wealth building and what our future can look like.
Speaker 1: And what a what a remarkable aim to put our
Speaker 1: frugal skill set to to be able to notice something
Speaker 1: profound for our future And it doesn't even have to
Speaker 1: be that distant of a future if we can start
Speaker 1: aiming at this now. So that's my confession and my
Speaker 1: reaction to this article that it really helps something click
Speaker 1: for me of Oh, this is why, this is why
Speaker 1: it's a decent aim. It's at that point that we
Speaker 1: really see a big shift in our ability to make
Speaker 1: more money. Yeah, I don't always do a good job
Speaker 1: of explaining why I think things are important. I just
Speaker 1: I'm really good at telling you things are important. But yeah,
Speaker 1: so it's not just an arbitrary number, but part of
Speaker 1: it is, like you do get a mindset shift because
Speaker 1: we are used to seeing numbers in like five digits,
Speaker 1: like annual salaries or like bonuses. That's kind of like
Speaker 1: five digits are kind of the max for most people.
Speaker 1: We are not conditioned to see six figure numbers. And
Speaker 1: so the first time you see a six figure number,
Speaker 1: not only does the math click, but your reality shifts
Speaker 1: as well, because it's it's a number that people don't
Speaker 1: get to until maybe later in life, until they don't
Speaker 1: have all of the time for compound interest to build.
Speaker 1: So if we can make that shift earlier with our
Speaker 1: money and our mindset and get used to six figure numbers,
Speaker 1: then the change doesn't just compound in the accounts, but
Speaker 1: it can change in our minds as well. And that's
Speaker 1: that's a big reason why that six figure number is
Speaker 1: so important. But it is also the hardest to get
Speaker 1: because of the math. And if you're in our membership,
Speaker 1: you'll see the personal Finance simplified course that we have
Speaker 1: in there. We actually have a lesson about compound interest
Speaker 1: and investing, and you can see the um it's what
Speaker 1: James clear refers to as like the plateau of latent potential.
Speaker 1: And you think that your growth is going to be
Speaker 1: this linear path, it's just gonna go like straight up.
Speaker 1: But what we see is that really it's if you
Speaker 1: zoom out, the first ten twenty years is pretty pretty flat.
Speaker 1: You're going up a little bit, a little bit, a
Speaker 1: little bit, and then once you hit that ten fifteen
Speaker 1: year mark, you start to make like crazy growth. And
Speaker 1: once you hit the twenty year mark, it just it
Speaker 1: doesn't even go like you know, east west anymore. It's
Speaker 1: just going straight north like that. That line looks like
Speaker 1: it's going straight up. It's a slide. You don't want
Speaker 1: to go down right, Yeah, so it is, but you
Speaker 1: have to get through that first ten fifteen years where
Speaker 1: the progress looks pretty flat. And that's where this a
Speaker 1: hundred thousand mark is. And and we have a graph
Speaker 1: where it shows you on the path to a million,
Speaker 1: what that first hundred thousand looks like, and it's the
Speaker 1: shift is kind of crazy for anyone who has a mortgage,
Speaker 1: it's it's a similar concept. Those first few years it's
Speaker 1: primarily interest, and then the last years it's primarily principle.
Speaker 1: And yeah, you're that's not quite the way that we
Speaker 1: want to work towards wealth. But it's that kind of
Speaker 1: concept where there's a lot of heavy lifting at the
Speaker 1: front and then you just see amazing results towards the end.
Speaker 1: But even better with saving and investing than with paying
Speaker 1: down interest on your house. But with the way that
Speaker 1: they break down the math, I think it was helpful
Speaker 1: for me to digest and felt attainable. And I also
Speaker 1: liked how they gave realistic expectation for how long this
Speaker 1: would take. So they give a basic example of someone
Speaker 1: investing ten thousand dollars annually with an interest rate of
Speaker 1: seven percent. Obviously, you're not always guaranteed that this is
Speaker 1: just the numbers that they're working. With interest rate of
Speaker 1: seven percent, it would take a little over seven years
Speaker 1: for you to reach that one hundred thousand dollar mark.
Speaker 1: But I would say investing saving ten thousand dollars a
Speaker 1: year is relatively attainable for the average person. Your average
Speaker 1: salary could potentially do this. Maybe you'd have to add
Speaker 1: in a side hustle. Maybe it would take you a
Speaker 1: few years to get to that point, and that's fine too,
Speaker 1: but it also felt pretty typical, pretty average if you
Speaker 1: were going, you know, decently hard at saving that amount
Speaker 1: of money, which, again I like attainable. I like what
Speaker 1: can be sought after for the typical average person. You know,
Speaker 1: if the average household is earning collectively sixty thousand dollars,
Speaker 1: then this is possible. Obviously there are people who that's
Speaker 1: not the case and it will take longer, but recognize,
Speaker 1: you know, seven years isn't short, so even if it's
Speaker 1: ten years, fifteen years, it's still worth aiming at because,
Speaker 1: like we're describing here, you're gonna see exponential growth once
Speaker 1: you hit that mark. Ten fifteen years might feel like
Speaker 1: a long time, but let's still get after it, because
Speaker 1: once you reach that ten fifteen years, the amount of
Speaker 1: time that it takes to reach the next one thousand
Speaker 1: dollars is going to be even shorter than that. So
Speaker 1: that was helpful for me, that bite size understanding of oh,
Speaker 1: here's how I can break it down into smaller goals. Yeah,
Speaker 1: and we don't want to minimize ten thousand dollars a
Speaker 1: year for somebody who's never invested before, that's a lot.
Speaker 1: You don't have to start there. It's it's totally okay,
Speaker 1: like I'm not doing it yet. I will, I'll clarify
Speaker 1: I'm not doing it yet. It just felt like, oh, okay,
Speaker 1: in one year, it's less than a thousand dollars a month. Yeah,
Speaker 1: so you can start with ten dollars a month and
Speaker 1: work your way up. I think ten years to get
Speaker 1: to a hundred thousand dollars is a totally reasonable goal.
Speaker 1: And typically when you set your eyes on something that's
Speaker 1: ten years away, you end up doing it in a
Speaker 1: fraction of the time as well. So if you set
Speaker 1: a ten year goal, you're likely going to reach it
Speaker 1: in that you know seven point eight four that we're
Speaker 1: talking that we're seeing here, or even less. You just
Speaker 1: have to start working towards it. But yeah, so seven
Speaker 1: point eight four is what they are, and I love
Speaker 1: the I use the seven percent when I calculate retirement
Speaker 1: savings too, because a diversified portfolio will usually reach hearn that,
Speaker 1: So seven point eight four and then your next hundred k.
Speaker 1: This is the hypothetical Shannon. Shannon is our hypothetical friend
Speaker 1: who invests ten thousand dollars a year. If Shannon changes
Speaker 1: nothing and keeps investing for the next ten years or
Speaker 1: for the next like however many, she reaches her second
Speaker 1: hundred thousand dollars in five point one years. And so
Speaker 1: how does that happen. It's because of compound interest. Every
Speaker 1: time your money can build on other money, it's going
Speaker 1: to grow faster, and so that's why it always takes.
Speaker 1: When you're starting at zero, you have nothing to compound on.
Speaker 1: That's why the first hundred k is going to take
Speaker 1: the longest, and then it's going to get shorter every
Speaker 1: hundred k from there. So we get five just over
Speaker 1: five years for the to double the money essentially, and
Speaker 1: then for the next we go down to three point
Speaker 1: seven eight years, and then we go down to three years,
Speaker 1: and then we go down to a hundred thousand dollars
Speaker 1: in two and a half years. So that's over. Our
Speaker 1: hypothetical friend Shannon has gone from zero to half a
Speaker 1: million dollars in twenty two years. But that path, and
Speaker 1: you can even see right on this graph, it has
Speaker 1: not been linear. The first seven point eight four of
Speaker 1: that years was the flattest, and then we get a
Speaker 1: little bit more curve up for the next hundred k,
Speaker 1: and a little bit more curve up, and then once
Speaker 1: we get to a million, that graph just start shooting up.
Speaker 1: But I thought it was really even like for somebody
Speaker 1: that has saved it, to see those time blocks get
Speaker 1: shorter and shorter on this graph is super eye opening
Speaker 1: and encouraging, especially when I feel like my saving is
Speaker 1: kind of arbitrary at this point. Yeah. I also really
Speaker 1: enjoyed the graph that showed what growth on our savings
Speaker 1: and invest and would look like at different interest rates,
Speaker 1: because I think that's always the whole that we want
Speaker 1: to poke in this of oh, well, you you're not
Speaker 1: gonna get twelve percent interests, you're not gonna get ten
Speaker 1: percent interest, You're gonna be seven percent interest. So it's
Speaker 1: helpful to see what the growth looks like. Obviously it's
Speaker 1: less growth if it's a three percent interest, but it's
Speaker 1: helpful for my brain to see that chart. Yeah. I
Speaker 1: also liked that graph because sometimes people will use six,
Speaker 1: sometimes people will use eight, so you can see depending.
Speaker 1: I mean, the interest rate is arbitrary because you can't
Speaker 1: control it, but you can kind of see the difference.
Speaker 1: Or actually I would say, like the not big difference
Speaker 1: like how fast you're going to save, But I it's
Speaker 1: less important to focus on the rate of return and
Speaker 1: more important to focus on the rate of saving, which
Speaker 1: is kind of where we get into going through in
Speaker 1: these like these X charts, let's see yeah, and then
Speaker 1: the author just says, like the MathWorks at every level.
Speaker 1: So yeah, and the magic of compound interest doesn't tend
Speaker 1: to reveal itself until you cross the hundred thousand net
Speaker 1: worth mark, but then you get to see it at
Speaker 1: every level. Be on there. So let's talk about how
Speaker 1: to do this. What are some of the key components
Speaker 1: If we were to say this is a great aim
Speaker 1: I want to do this, how do we do it?
Speaker 1: And so Investor PDA has a really great article breaking
Speaker 1: some of that down that we're going to go through.
Speaker 1: Jen would you think so? I liked this article because
Speaker 1: it was a little different than all the other ones, Like, yes,
Speaker 1: you're going to get lower your expenses and increase your income. Duh.
Speaker 1: Every article is going to say that. But there's a
Speaker 1: few unique perspectives that I think you don't really hear
Speaker 1: about think about unless you're like entrenched in the personal
Speaker 1: finance world. So I really wanted to go through all
Speaker 1: of these two to make sure that, like you know
Speaker 1: that it's not just about lowering your expenses and increasing
Speaker 1: your income. Obviously those are the two biggest things, but
Speaker 1: there is more to it. So the first one here
Speaker 1: is the right mindset. This was actually the first one
Speaker 1: on most of the articles, which just brings like back
Speaker 1: home the point that your mindset is not just like
Speaker 1: a woo woo thing that you don't have to think about.
Speaker 1: It is something that directly impacts your ability to do
Speaker 1: the concrete actions. Um And so for most people, saving,
Speaker 1: like what I said at the beginning, saving your first
Speaker 1: hundred thousand dollars is difficult because we don't think in
Speaker 1: six figure numbers. We don't think that we are capable
Speaker 1: of those numbers, because as we have not reached them ourselves,
Speaker 1: we do not have people close to us that have
Speaker 1: reached them, or people in our outer network that have
Speaker 1: six figure savings, at least that we know of. I
Speaker 1: would argue that there are probably people with six figure
Speaker 1: savings that just don't talk about it because they think
Speaker 1: it seems like like they're being better than other people.
Speaker 1: And so I think that's another reason why we need
Speaker 1: to like expand the personal finance conversation, because if you
Speaker 1: have a hundred thousand dollars saved, you should feel more
Speaker 1: free talking about that in a way that lifts other
Speaker 1: people up and doesn't lift yourself up. And they're for
Speaker 1: sure our ways to do that. But yeah, we need
Speaker 1: to have the right mindset and believe that a six
Speaker 1: figure or seven figure net worth is not only attainable,
Speaker 1: but it is simple to achieve and it is necessary
Speaker 1: to achieve. Honestly, a hundred thousand dollars is not going
Speaker 1: to get you anywhere in retirement, so it is like
Speaker 1: minimal requirement to get to six figures, and it's just
Speaker 1: the earlier you get there, the better off you are
Speaker 1: down the road. Similar to debt payoff, saving your first
Speaker 1: one thousand dollars is not going to happen accidentally. So
Speaker 1: we certainly have to have a mindset that corresponds with
Speaker 1: an ability to do this and the why behind it,
Speaker 1: why we're doing it, that's going to keep us sustained
Speaker 1: because at best it's gonna take overset like a little
Speaker 1: over seven years, and for those of us who live
Speaker 1: on a little bit lower incomes, it's going to take
Speaker 1: even longer than that, So that's a marathon, that's not
Speaker 1: a sprint. It's gonna take a while. So we're gonna
Speaker 1: have to have a good framework in our in our
Speaker 1: thought life and how we're going to get after this goal.
Speaker 1: Of course, the next thing, like we said, it's going
Speaker 1: to be on all of these articles, but it's worth
Speaker 1: the reminder that we're gonna need to keep costs low. Again,
Speaker 1: this is gonna be in a sustainable way. This cannot
Speaker 1: just be rice and beans forever and always, because again
Speaker 1: we're talking seven to fifteen years that this could take
Speaker 1: us to get to this point, usually after we've paid
Speaker 1: off debt, unless you're combining debt payoff with savings and investing.
Speaker 1: This is this is long term, So keeping costs low
Speaker 1: but in a way that's gonna work for you long term.
Speaker 1: Some of this could mean looking at, of course, your
Speaker 1: variable expenses, your food that's a big expense every month,
Speaker 1: and so certainly making the smaller shifts like dinner at home,
Speaker 1: not eating out as much. I know it sounds relatively minimal,
Speaker 1: but over the over a year, over two years, ten years,
Speaker 1: that is going to add up to thousands of dollars
Speaker 1: of money savings that if we've got that mindset to
Speaker 1: support it can go towards that savings and investing. Looking
Speaker 1: at transportation costs, housing costs. Of course you want to
Speaker 1: look at the big expenses and the little expenses and
Speaker 1: trying to keep it as low as possible. I was
Speaker 1: just thinking, so we say it's a marathon to get
Speaker 1: to a hundred thousand dollars, but you can run a
Speaker 1: marathon in a day, Like you can run it in
Speaker 1: a day a marathon, and when you're trained, like if
Speaker 1: you're a regular runner, even if I don't run marathons,
Speaker 1: but I'm a regular runner, like I could run a
Speaker 1: marathon in a month or two, Like a twenty six
Speaker 1: point two miles, I could do that in like two
Speaker 1: months easily. Like this is like a marathon is nothing
Speaker 1: compared to this, So like think about that when you're
Speaker 1: using the terminology, like it's it's not a sprint, it's
Speaker 1: not a marathon. It's like a lifelong Like this is
Speaker 1: a hall like I don't even know marathon. Yeah, yeah,
Speaker 1: this is a training for triathle Like at the magnitude
Speaker 1: of it, like this isn't I know, like fire bloggers
Speaker 1: and like all these other people will make it seem
Speaker 1: like it's easy to save money's it is a life
Speaker 1: like journey mission. I think it's a mission. I think
Speaker 1: that's the word I'm going to go with. But yeah,
Speaker 1: so commission, yes, yeah, So, like these changes that you
Speaker 1: make in your lifestyle to reduce your expenses, is that
Speaker 1: is significant because you're not This isn't just a I'm
Speaker 1: gonna eat rice and beans for six months and sprint
Speaker 1: to see challenge myself to see how much debt I
Speaker 1: can pay off. I love that. I love that idea,
Speaker 1: But this is longer, and you need to develop a
Speaker 1: system of values based spending um and understand yourself and
Speaker 1: what you want because that's the only way that you're
Speaker 1: going to make this this type of saving sustainable. So, yes,
Speaker 1: we love these tips. We've got over two hundred of
Speaker 1: them in our Modern Frugal Living e book that I'm
Speaker 1: sure a lot of you've seen. Those are just the start,
Speaker 1: Like those are the foundation really identifying your values and
Speaker 1: creating a values based spending system. That's the goal, Like,
Speaker 1: that's the goal, that's the tool to get here. So
Speaker 1: I think I think that's like an important perspective that
Speaker 1: I like literally just came realized on the spot. The
Speaker 1: second one I really appreciated the way this one was worded.
Speaker 1: The second one is to reduce your interest burden. I
Speaker 1: appreciate this line so much because typically you would see
Speaker 1: pay off your debt, but this is like a mindset
Speaker 1: shift of why are we paying off a debt? What's
Speaker 1: the point? Like, yeah, we hear, yeah, I shouldn't have
Speaker 1: any debt. Let me pay it off. It's evil, it's not.
Speaker 1: But the reason we pay off our debt is because
Speaker 1: it is charging us interest. It is costing us to
Speaker 1: have that money. If it was not costing us to
Speaker 1: borrow that money, no one would pay off their debt.
Speaker 1: Nobody has paid off their student loans in the last
Speaker 1: two years, their federal student loans. Like nobody has done that. Well,
Speaker 1: I'm sure, I'm so sorry. If you have, I don't
Speaker 1: want to exclude you, but like most people haven't, if
Speaker 1: it's not costing you, you won't pay it off. And
Speaker 1: so the real thing that we're doing by paying off
Speaker 1: debt is reducing our interest burden. And we want to
Speaker 1: specifically focus on interest burdens that are higher than the
Speaker 1: returns that we could get through investing. And so that
Speaker 1: is a big distinction to make where there are camps
Speaker 1: where it's like I only want to pay off debt
Speaker 1: and then I'll invest or. I only want to invest,
Speaker 1: I don't want to pay off debt, or somewhere in
Speaker 1: the middle. The real point of paying off debt is
Speaker 1: to reduce your interest burden. And I like the number
Speaker 1: seven percent when calculating return like long term investment returns
Speaker 1: for a diversified portfolio, and so really anything I know
Speaker 1: David Bach of the Latte effect, he says anything under
Speaker 1: anything over five So anything over that five to seven percent,
Speaker 1: that that is a heavy interest burden and should definitely
Speaker 1: be eliminated. Anything under five percent is kind of like
Speaker 1: less pants on fire and more like sitting on hot
Speaker 1: coals sort of thing. So you can if you're thinking
Speaker 1: about maybe I should have gone with heavy things versus fire,
Speaker 1: I can't think of anything right now, but and so yeah,
Speaker 1: if you're thinking about your burden as being fire things
Speaker 1: that are above what you would get in the in
Speaker 1: your long term investment, is that's pants on fire, get
Speaker 1: rid of it, and then below is hot coals. It's
Speaker 1: definitely diminishing your returns. But it's not like you're not
Speaker 1: dumb for not getting rid of it. Like, so, we've
Speaker 1: got so many images, so much imagery happening here, picturing
Speaker 1: people hopping around the pants. I do not how where
Speaker 1: in my mind did people take their pants off? Jill nowhere?
Speaker 1: You said, if your pants are on fire, you want
Speaker 1: to get out of that. You don't want to get
Speaker 1: out of that. That would be like like like consolidating
Speaker 1: your fiery pants put the fire out, Jill, Gosh, your
Speaker 1: mindset needs to be shifted. We don't want to take
Speaker 1: the pan if we want to put the fire out
Speaker 1: on the pants because we like the pants. Okay, Well,
Speaker 1: eventually the pantsil need to get changed because so move on.
Speaker 1: The next one is invest in. Okay, and I refused
Speaker 1: to use this word. Just mean it's better than the
Speaker 1: word cheap, but I'm not using it invest in. I'm
Speaker 1: going to say efficient vehicles and products savvy. I don't
Speaker 1: know to understand what what that is, so we're not
Speaker 1: using it. So invest in efficient smart vehicles and products. So,
Speaker 1: once you have begun to ramp up your savings and investing,
Speaker 1: you've got a plan you want to make sure that
Speaker 1: you're putting your money in the smartest possible place. So
Speaker 1: they list out a few things to be considering. We
Speaker 1: want vehicles and products that are going to help us
Speaker 1: save on taxes. Some of these tax sheltered investment options
Speaker 1: include your traditional for oh one K, your traditional I
Speaker 1: r A. These are things that help to protect and
Speaker 1: buffer us from some of that tax burden. They will
Speaker 1: be helpful vehicles for investing. Yeah, it's it's it's helpful.
Speaker 1: We're not talking about cars. We're talking about investment vehicles
Speaker 1: and investment products. It's not cars on fire on fire. Yeah. So, um,
Speaker 1: I think what a lot of people miss. We we
Speaker 1: talk a lot about low cost investments. We really love
Speaker 1: index funds and e t s because they're very affordable
Speaker 1: and user friendly investment options. But people don't think about
Speaker 1: how much their taxes are. Taxes are higher. They are
Speaker 1: higher percentage quote unquote fee than any brokerage or managed
Speaker 1: fund will charge you. So that's kind of the first
Speaker 1: thing that you want to look at, and you don't
Speaker 1: get that on the actual investment that's on the account.
Speaker 1: So that's why we love the tax advantage retirement accounts,
Speaker 1: your I ra A S and your employer sponsored So
Speaker 1: those are best if you are. So we had this
Speaker 1: in our ur Q and A with our membership last night.
Speaker 1: If you have a I R A and you're maxing
Speaker 1: that out and you want to invest more and you
Speaker 1: don't have an employer sponsored plan, where do you go? Well,
Speaker 1: one of your options is if you have your own business,
Speaker 1: you can actually open your own like solo for one
Speaker 1: K or something like that. You would have to see
Speaker 1: with a W two. There there are several different types
Speaker 1: of quote unquote employer sponsored plans you can open yourself
Speaker 1: if you have like your own side hustle. You just
Speaker 1: have to see how that conflicts with what your W
Speaker 1: two employer does and doesn't offer. But if you cannot
Speaker 1: open some kind of e SP employer sponsored plan, then
Speaker 1: you go to brokerage account like a traditional regular brokerage
Speaker 1: account as your last resort. But it's going to be
Speaker 1: you're you're paying taxes on what you've already earned, you're
Speaker 1: paying capital gains taxes, you're paying taxes later. Like it's not.
Speaker 1: It's still better than a savings account for sure, especially
Speaker 1: long term, but it is taxed higher than an I
Speaker 1: R A or A for a one K you're comparable,
Speaker 1: So taxes are important. Pay attention to them. Also along
Speaker 1: the lines of investing in the right types of vehicles,
Speaker 1: the vehicle not getting not a car that you're driving,
Speaker 1: but it's what you're in, what you're invested. Second is
Speaker 1: that's amazing. Is a manager risk appropriately? I know we
Speaker 1: talk about you hear this a lot, like what's your
Speaker 1: level of risk? And sometimes we don't know, but generally
Speaker 1: it's gonna be considering how much time you have, how
Speaker 1: old are you, how much time do you have until
Speaker 1: you retire. That's going to dictate some of the risk
Speaker 1: that you might take. But also how much you know
Speaker 1: about the investment. Do your own research. Don't just take
Speaker 1: the information from one per person who's doing something that
Speaker 1: sounds too good to be true. I know I know
Speaker 1: way too many people and I'm not going to say
Speaker 1: what it was or who it was, but just invested
Speaker 1: in some very risky because it wasn't even something to
Speaker 1: be investing in, didn't know much about it, just knew
Speaker 1: that someone who sounded kind of smart is doing this thing,
Speaker 1: and so like I might as well do it too,
Speaker 1: and lost a lot of money. And that's not just unlucky.
Speaker 1: That's like we didn't do our research. So that that's
Speaker 1: what we mean when we say manage dress. You know
Speaker 1: what you're investing in, and know how old you are
Speaker 1: and how much time you have yes to be investing.
Speaker 1: So I was listening to Scam Fluencers the podcast and
Speaker 1: they were talking about this Hollywood scam which ended up
Speaker 1: being a Ponzi scheme. But essentially the guy was taking
Speaker 1: investments from his friends and then instead of investing it
Speaker 1: into the actual business he said he had, he was
Speaker 1: paying off earlier investors and that's a that's a Ponzi scheme.
Speaker 1: And they were saying in the podcast that people invested
Speaker 1: their life savings into this, like everything they had parents, grandparents, friends,
Speaker 1: because this person they thought was their friend, this person
Speaker 1: they knew, they just thought they trusted. And I was
Speaker 1: so sad because this. Obviously, investing in businesses is a
Speaker 1: great way to get a higher return than the stock market,
Speaker 1: but the people that do that know that they could
Speaker 1: lose everything. Like venture capital funds expect only twenty of
Speaker 1: their investments to like make back a return. They just
Speaker 1: expect those to make back all of the percent of losses.
Speaker 1: Like that's how it works. You have to have money
Speaker 1: to lose if you're going to get these bigger gains
Speaker 1: from these like obscure investments. If you ain't got the
Speaker 1: money to lose, do it in a safe, safe space. Um,
Speaker 1: and for all that it's worth, the stock market is
Speaker 1: a safer space than so many other types of investments,
Speaker 1: especially if you are in a well diversified have a
Speaker 1: well diversified portfolio. So that's uh, that's what I learned
Speaker 1: from scam fluencers this week. Uh. The next is to
Speaker 1: maximize employee benefits. And so first we think of the
Speaker 1: matching on the four oh one K, which is always
Speaker 1: something you should get, um, I think. So we have
Speaker 1: like a chart in our membership in the investing lesson
Speaker 1: that gives you savings plans for a hundred thousand, like
Speaker 1: a five, ten and fifteen year plan, and I think
Speaker 1: the ten year plan, one of the tenure plans is
Speaker 1: just it's five eighty five a month and you could
Speaker 1: do five in I RA A and eight five in
Speaker 1: your employer sponsored plan and typically that's gonna be like
Speaker 1: they'll match that too, so it's gonna be you'll get
Speaker 1: to it even faster. But yeah, so take that for sure,
Speaker 1: But there are other employee benefits that can help you
Speaker 1: as well, such as discounts at places. They'll help you
Speaker 1: lower your expenses. Health savings accounts. This is a great
Speaker 1: thing if you don't have maybe an employer sponsored plan,
Speaker 1: but you do have a high deductible health care plan
Speaker 1: through your employer that has a health savings account, because
Speaker 1: this can be used kind of exactly like a four
Speaker 1: oh one K, but with a a little more flexible,
Speaker 1: much lower limit, so you can save like pre tax
Speaker 1: just like a four oh one K, and you can
Speaker 1: use it throughout your life on any qualified medical expenses.
Speaker 1: But if you don't and you use it like a
Speaker 1: four oh one K, then um, at gosh, I think
Speaker 1: it's fifty nine and a half. I could be wrong.
Speaker 1: I think it might be seventy. I don't know. Check
Speaker 1: my math, check my facts. It converts to a regular
Speaker 1: retirement account, so yeah, that health savings account is a
Speaker 1: great option if you have access to that and not
Speaker 1: like a four oh one K or something. But but yeah,
Speaker 1: maximize your employee benefits and whenever you're looking for new
Speaker 1: jobs to increase your income, compare employee benefits as well.
Speaker 1: Like ask to look at their four oh one K
Speaker 1: plan and look in the investments inside of it, see
Speaker 1: what the fees are on them, ask about their health
Speaker 1: savings account options like these are things that are also
Speaker 1: going to impress whoever you're interviewing with, because it means
Speaker 1: you know your stuff. These last two I'm going to
Speaker 1: combine because I think that they can go hand in hand.
Speaker 1: And also, you've heard of this, you know this. This
Speaker 1: is just your friendly reminder to create short term goals
Speaker 1: and generate additional income. We are going to be far
Speaker 1: more likely to get at big, lofty goals if we
Speaker 1: break them down into bite size, manageable, attainable pieces that
Speaker 1: allow us to experience winds along the way, celebrate, see
Speaker 1: the successes, see that we can do it, build our resilience,
Speaker 1: have muscle memory. Break it down into short term savings goals,
Speaker 1: and when those savings goals, even in the short term,
Speaker 1: feel a little bit too beyond your reach, generate additional income.
Speaker 1: I mean even if they're not beyond your reach, generate
Speaker 1: additional income because then you can reach all those short
Speaker 1: term goals faster. So, whether that means talking with your
Speaker 1: current employer, changing jobs, or starting aside hustle, you name it.
Speaker 1: It's always going to be a fantastic thing to aim
Speaker 1: at in how can I increase my income? We're not
Speaker 1: saying to push yourself to the point of stress overwhell fatigue,
Speaker 1: but are there creative ways to be bringing in more
Speaker 1: income that's going to help us get at these short
Speaker 1: term saving schools and the long term saving schools. Get
Speaker 1: us to that dollars and then just see the growth
Speaker 1: from there, and we're here for you along the way.
Speaker 1: And you know what else, we're also here for I
Speaker 1: have a follow up statement. We're here for my follow
Speaker 1: up statement. Chill, Okay. I just wanted to say, like,
Speaker 1: it's it's no longer an option to only have one
Speaker 1: stream of income, Like the world is volatile, inflation is insane,
Speaker 1: and it's no longer acceptable for us to have one
Speaker 1: stream of income. Like I think we all know that
Speaker 1: at this point, even if we're trying to avoid the fact.
Speaker 1: Is it okay? Is it just debatable? Like probably not.
Speaker 1: But we can sit around and wait for things to
Speaker 1: change outside of our control, or we can do something
Speaker 1: about it that's inside of our control now. And if
Speaker 1: you wait five years, you're gonna wish that you had
Speaker 1: started five years ago when you heard this, and so
Speaker 1: I think it's it's important. It's more important than just like, oh,
Speaker 1: let me get on uber or uber eats and and
Speaker 1: make some quick cash. I think we all need to
Speaker 1: be focused on how do I like generate additional income
Speaker 1: long term? And that's all I have to say about that.
Speaker 1: So I think a consideration your capacity I'm gonna be.
Speaker 1: I'm holding attention. I'm holding attention of those tense sticks
Speaker 1: on all sides because I know that there are some
Speaker 1: people who work eighty hours a week, even sixty hours
Speaker 1: a week, and recognize your life season recognize your capacity.
Speaker 1: But certainly I agree, have your sights on this, whether
Speaker 1: that means that's not sustainable even if you stay in
Speaker 1: that job. So that could mean a change in employment
Speaker 1: that generates additional income, or it could mean, yes, that
Speaker 1: we find ways that don't overwhelm or over burden us
Speaker 1: that could bring in additional income. To the permission for
Speaker 1: creativity in this space, that we don't have to stay
Speaker 1: in one place and think this is just what I
Speaker 1: have to base my life around. Make what you set
Speaker 1: your hands to also work for you. You know what
Speaker 1: we also make work for us. Jill, You're never gonna
Speaker 1: be there. It's never gonna be there. You Okay, it's there.
Speaker 1: The bill of the week. That's right, It's time for
Speaker 1: the best minute of your entire week. Maybe a baby
Speaker 1: was born and his name is William. Maybe you've paid
Speaker 1: off your mortgage, maybe your car died, and you're happy
Speaker 1: to not have to pay that bill anymore. Duck bills,
Speaker 1: Buffalo bills, Bill Clinton, this is the bill of the week. Hello.
Speaker 1: So I'm great from Maryland, and I first off love
Speaker 1: the podcast. But my Bill of the week is that
Speaker 1: I was like, looking at my budget and everything, I
Speaker 1: was like, okay, well I could cancel my digital only
Speaker 1: Weight Watcher subscription. It's like, yeah, they advertise other things
Speaker 1: in the program as well, like little things you go
Speaker 1: buy too. So I'm like, how is that really different
Speaker 1: than my Fitness Pal, which is freeze. You know. I'm like, okay, also,
Speaker 1: I'll cancel that. I'll switch over to my Fitness Pal.
Speaker 1: I mean, I sure I enjoy the community and Weight Watchers,
Speaker 1: but I'm gonna make do save the money. And then
Speaker 1: as I'm like going through the cancelation process and everything,
Speaker 1: it's like this discounted price orteen dollars a month, and
Speaker 1: I'm like no, no, no, no, cancel, cancel. It's like
Speaker 1: two three months. I'm like, okay, so that's my bill
Speaker 1: of a week. I got two three months of Weight
Speaker 1: Watchers because I was like, nam, I'm gonna cancel. So
Speaker 1: I gave him the fake out although it was actually serious. Anyway,
Speaker 1: that's my bill of the week. But that's hilarious. I'm
Speaker 1: so glad that we could help you get that. I
Speaker 1: love the it was serious, but then it turned into
Speaker 1: a fake out and the benefit that you can receive
Speaker 1: from that. So that is both a tip for someone
Speaker 1: who wants to try and reduce expenses to see what
Speaker 1: is the company going to give you, because they'd rather
Speaker 1: have your loyalty than lose you. But also I would
Speaker 1: encourage you once those two free months are up, see
Speaker 1: what your life is like without it. Are there things
Speaker 1: that you can implement beyond that that you don't have
Speaker 1: to pay for that subscription? Again, when we're talking about
Speaker 1: getting met some debt payoff for long term savings goals,
Speaker 1: those are the things that are really going to help us,
Speaker 1: not keeping those ten dollar dollar, twenty dollar, eight dollar subscriptions,
Speaker 1: but really honing in on our budget and figuring out
Speaker 1: free alternatives. We're here for you. We're celebrating that bill.
Speaker 1: If you all listening, have a bill, whether it's a
Speaker 1: fake out or a real out, or your pants are
Speaker 1: on fire, we want to hear it. Visit Frugal Friends
Speaker 1: podcast dot com, slash bill, leave us your bill, and
Speaker 1: now it's time for you. Think that's how their pants
Speaker 1: gone on fire? They were hit by lightning. Possibly, Gosh,
Speaker 1: they have more problems than their pants being on fire.
Speaker 1: So true? Well? Uh. In this episode of questions that
Speaker 1: Goldie has given us to get vulnerable with you, I
Speaker 1: like this one. What is the most challenging part of
Speaker 1: saving for you? Chill competing goals. I have so many
Speaker 1: things that I want to do with my money, and
Speaker 1: I have made more money. I have generated additional income,
Speaker 1: which is so amazing to see that it's possible. From
Speaker 1: two thousand eight, we've really done it. We have. We've
Speaker 1: done it, and I hope that we keep doing it.
Speaker 1: But the goals keep increasing, and the part of that
Speaker 1: could be lifestyle inflation for sure. But I've got so
Speaker 1: many things that I want to do and that i
Speaker 1: want to do right now that it can be tough
Speaker 1: to get at that that one thing of ten thousand
Speaker 1: dollars a year. I'm not doing that. I'd love to
Speaker 1: get to the point of doing that, but I also
Speaker 1: want to cash flow renovations. I also want to not
Speaker 1: get into further debt. And the reality is is that, well,
Speaker 1: I want to avoid a scarcity mindset. My resources are
Speaker 1: not unlimited. I don't have unlimited money. I'm still like
Speaker 1: a very typical person, like I don't don't make crazy
Speaker 1: amounts of money. I mean more than I did five
Speaker 1: years ago, But I still have to be really thoughtful
Speaker 1: about what am I going to do with this. So
Speaker 1: some of that has to do with all, right, can
Speaker 1: I give myself grace, freedom and permission to take time
Speaker 1: to even get to that ten thousand dollar of savings idea?
Speaker 1: But also can I generate more income? So some of
Speaker 1: this cash flowing renovations is what's going to allow us
Speaker 1: to generate more income through having short term rentals. So
Speaker 1: there's a I have to keep reminding myself of why
Speaker 1: am I doing what I'm doing? How is this helping
Speaker 1: me get to my goal? I can't do it all
Speaker 1: everything at once is this still the best thing to
Speaker 1: be doing with my time, energy resources. Okay, keep going nice.
Speaker 1: That's my little self talk. I will say, you may
Speaker 1: have gone first, but I wrote down my answer first,
Speaker 1: and mine is also goals, So mineus specifically having concrete
Speaker 1: goals I have, Yeah, I mean competing goals is I
Speaker 1: think most people's going to be most people's answers, Like,
Speaker 1: there are so many things pulling for our money, and
Speaker 1: with every increase in income, we have another financial goal
Speaker 1: to add somehow. But I think for me, I am
Speaker 1: still a little burnt out from our debt payoff journey.
Speaker 1: I know it's been like five years, but those two
Speaker 1: years were very traumatizing and I have I don't know,
Speaker 1: and then we just we saved like so fast for
Speaker 1: our to get to that first hundred K. So I
Speaker 1: think it hasn't been challenging like stalking away money because
Speaker 1: our frugality allows us to naturally spend under what we make.
Speaker 1: We pay less attention to our budget if we have one,
Speaker 1: because we know what we make and what we want
Speaker 1: and we just save the excess. And so having a
Speaker 1: concrete goal, though, does help us save more, Like with
Speaker 1: the buying the new house that was like a big
Speaker 1: thing for us, so a big saving school. So I
Speaker 1: would say, yeah, having the concrete goal. How having the
Speaker 1: one goal, I think I think we can sum this
Speaker 1: lightning round up by saying, like, focus on one goal,
Speaker 1: which is what we always say, focus on one goal
Speaker 1: at a time. And so if you are paying off
Speaker 1: debt and you still want to get the clock running
Speaker 1: on your compound interest, you don't have to choose one
Speaker 1: or the other, but choose one is your primary goal,
Speaker 1: and then just maybe do a little excess here and
Speaker 1: there at the other um And for most people listening,
Speaker 1: that's usually going to be, like, focus on paying off
Speaker 1: the debt, especially if it is a heavy interest burden,
Speaker 1: and then get your employer match every month if you
Speaker 1: have one, or do a hundred dollars into a roth
Speaker 1: Ira every month, money that you won't miss that won't
Speaker 1: make a big difference in your debt payoff, so that
Speaker 1: you can start to get that ball rolling. But it
Speaker 1: doesn't feel like these goals are competing. Yeah, having something
Speaker 1: on in the background that you're not thinking about the
Speaker 1: the auto payment into that savings, so that your real
Speaker 1: time energy attention goes to the things that are gonna
Speaker 1: be necessary for whatever the main goal is at the time.
Speaker 1: Thanks everyone so much for listening. It's been a pleasure
Speaker 1: hanging out with you. And many of you know that
Speaker 1: we have a private community where we do monthly money challenges.
Speaker 1: This is the community I was talking about through this
Speaker 1: episode where Jen was like, I have a goal to
Speaker 1: help people get to this one thousand dollars of savings.
Speaker 1: So if this sounds intriguing to you, feel free to
Speaker 1: check it out. But we also offer accountability groups and
Speaker 1: we want to congratulate people in this community. One of
Speaker 1: our members just had a big win, Emily, and she
Speaker 1: titled her announcement up Level. She said, finally opened up
Speaker 1: a roth Ira for my husband. Now we just need
Speaker 1: to link his accounts and fund it. I also opened
Speaker 1: up an online bank account so I can get out
Speaker 1: of my Shifty account. Oh that's not what she said
Speaker 1: for them. That was my way of centering get out
Speaker 1: of her Shifty account. I really need to switch all
Speaker 1: of our bank accounts and consolidate them, but one step
Speaker 1: at a time. Next step is a switch to my
Speaker 1: direct deposit. I'm going to use this thread to update
Speaker 1: my progress so y'all can hold me accountable. Yes, Okay,
Speaker 1: well I'm gonna go back in and check that thread, Emily,
Speaker 1: but congrats. I love all the actual progress that you're making.
Speaker 1: And yeah, right now, in May, we're doing an investing challenge,
Speaker 1: so you'll just have to see what our challenges for
Speaker 1: June amazing. Thanks everyone for listening. If you want to
Speaker 1: check out our monthly challenge community, head to Frugal Friends
Speaker 1: podcast dot com slash club to see what challenge we
Speaker 1: have coming up next. See you all next week. Frugal
Speaker 1: Friends is produced by Eric Syrian.